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Airline investments are not for the faint of heart. Even professionals like Warren Buffett can’t handle it. You prefer to accumulate liquidity instead of chasing bargains, a warning?
Those were the days when Warren Buffett could contact his shareholders. . .
If you want to make money from investments in the aviation industry, you need luck or tactical skill. This is a high standard, which obviously not even the American legend of entrepreneurs and investors Warren Buffett meets. The man, considered the “brilliant investor,” had played a major role on major US airlines in recent years, and thus suffered a hard landing.
Airline stocks – constantly sold
Ultimately, the cyclical business of corporations has collapsed due to the crown crisis, and operating prospects are obviously so uncertain for him that he has sold all of the airline’s shares in recent days. This makes it as consistent as after comparable failures, such as commitments to IT group IBM or food manufacturer Kraft Heinz.
The radical “sales solution” may have contributed to his Berkshire Hathaway company posting a book loss of nearly $ 50 billion in the first quarter. Buffett has a problem similar to that of the Swiss National Bank. Both are based on huge investment portfolios, which generate good returns in good times, but whose value can be lost in accounting times on turbulent days. The decision also shows how consistently it reduces losses as soon as a company’s or industry’s business model changes negatively from one day to the next. This sense of reality not only distinguishes Buffett, but can also generally be understood as a warning. As a warning against pink glasses betting on a rapid and sustainable recovery in the global economy.
Buffett accumulated liquidity instead of buying
After all, Berkshire said in the recently released quarterly report that the Corona crisis “began to have a significant impact on operating business in March and will likely impact almost all lines of business in the second quarter.” The duration and impact of the pandemic could not be reasonably estimated at this time. Buffett anticipates further depreciation and prefers to accumulate liquidity of just under $ 140 billion instead of using it for cheap purchases, as he did in previous crises. That means something.
